FDI rises 19% in the first quarter

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FDI rises 19% in the first quarter

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Foreign direct Investment (FDI) to Korea in the first quarter of this year rose substantially with inflows from China and Europe.

Investment in service industries fell compared to a year ago. However, the government expects FDI in the services sector to eventually grow as Chinese investors’ interest in Korea’s gaming and hospitality business is growing.

According to the Ministry of Trade, Industry and Energy on Monday, FDI registered with the government for the quarter was up 19.3 percent from the previous year and reached $4.24 billion.

The amount that actually arrived in the country fell 43.1 percent to $1.83 billion as of the end of the quarter.

“Saudi Aramco’s $1.84 billion investment in S-Oil arrived in the first quarter of the last year, and this huge amount was the reason this year’s actual number looks less impressive,” said Lee Sang-jin, director general of the ministry’s investment policy at a briefing Monday at the Sejong Government Complex. “There is a gap between the final figure for registered FDI and the actual amount that arrived, but we are expecting to receive most of the balance in the first half of this year.”

By segments, manufacturing was the big winner, seeing $1.26 billion in investments in the first quarter, up 226 percent year-on-year from $387 million in the first three months of 2015.

The ministry credited the SK Advanced project, which is a joint venture worth $97 million among Korea’s SK Gas, Saudi Arabia’s APC (Advanced Petrochemical Company) and Kuwait’s Petrochemical Industries Company to build a propylene plant in Ulsan. It was one of the key contributors to the surge in investment in manufacturing.

“During President Park Geun-hye’s tour of the Middle East last year, we were able to attract some new investment deals in the region including SK Advanced,” said Lee at the trade ministry.

The project kicked off earlier this year.

“Trade Minister Joo Hyung-hwan was also successful in getting new deals last month when he visited China,” Lee added.

Investments in the services sector fell 0.6 percent year-on-year to $2.95 billion won, according to the ministry.

But the ministry said it expects investment in the service sector to improve with growing interest in Korea’s gaming and hospitality sectors from China.

By region, investments coming from the European Union (EU) and China rose significantly, while those from the United States and Japan fell compared to the previous year.

The EU invested a total of $1.76 billion, up 405.8 percent from last year, and China invested $0.38 billion, 603.8 percent more than in the first quarter of 2015.

Investments from Japan have declined since 2013, and they fell 44.4 percent year-on-year in the first quarter to $160 million. Investments from the United States dropped 56.2 percent to $550 million.

“The government plans to attract more foreign investment by finding ways to expand export volumes and to improve the industrial structure,” Lee said.

“The 51 countries that Korea has signed free trade agreements with account for more than 71 percent of the nation’s exports, and the government will do its best to attract investments by taking advantage of this network.”

Meanwhile, FDI registered with Korea last year as a whole was $209.1 billion, up 10 percent from $190 billion in 2014.


BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]

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